PITTSBURGH, Oct. 24 /PRNewswire-FirstCall/ -- The PNC Financial Services
Group, Inc. (NYSE: PNC) and National City Corporation (NYSE: NCC) today
announced that they have signed a definitive agreement for PNC to acquire
National City for $2.23 per share, or an aggregate fixed amount of
approximately $5.2 billion in PNC stock. Additionally $384 million of cash is
payable to certain warrant holders. Total consideration approximates National
City's market capitalization as of the close of business on October 23, 2008.
National City shareholders will be entitled to 0.0392 share of PNC common
stock for each share of National City.
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PNC plans to issue to the U.S. Treasury $7.7 billion of preferred stock
and related warrants under the TARP Capital Purchase Program subject to
standard closing requirements. The U.S. Treasury Department approval of PNC's
participation enables PNC to further strengthen its capital position,
resulting in an estimated pro forma Tier 1 capital ratio for the combined
company of approximately 10 percent.
"The acquisition of National City will increase our core deposit base to
$180 billion, making PNC the fifth largest U.S. bank by deposits. At a time
when core funding is key, we see our deposit strength as an important success
factor. Upon closing the transaction, we will implement our successful
business model and execute our strategies for managing risk, achieving cost
efficiencies and growing high-quality revenue streams," said James E. Rohr,
chairman and chief executive officer of PNC. "We believe this strategic
combination will continue PNC's efforts to build capital strength and
shareholder value. We are also gratified that we have been selected to
participate in Treasury's Capital Purchase Program, which has helped to put
this transaction on a very solid footing."
The transaction has an estimated internal rate of return to PNC of more
than 15 percent and is expected to be accretive to PNC's earnings in the
second year. PNC's fair value adjustments and provisions for future losses of
National City's current loan portfolio will bring the cumulative impairment of
these loans to approximately 17.5 percent. PNC will continue to liquidate non-
core and impaired loans.
"The combined company will have greater scale and scope, enhancing service
to our customers and communities and providing greater opportunities for our
employees. This transaction is about two companies that fit well together in
terms of geography, products and services," said Peter E. Raskind, chairman,
president and chief executive officer of National City.
Upon closing the transaction, Raskind will be appointed a PNC vice
chairman, and one National City director will join the board of the combined
company.
In addition to ranking fifth nationally in deposits, the combination with
National City is expected to place PNC fourth among U.S. banks in number of
branches. It will give PNC the No. 1 deposit share position in Pennsylvania,
Ohio and Kentucky and will rank the company No. 2 in Indiana and Maryland.
PNC expects to incur merger and integration costs of approximately $2.3
billion. The transaction is expected to result in the reduction of
approximately $1.2 billion of noninterest expense through the elimination of
operational and administrative redundancies.
Under terms of the agreement, PNC will acquire all outstanding shares of
common stock of National City in a stock-for-stock transaction, which has been
approved by the Boards of Directors of both companies. In connection with the
transaction, National City has issued to PNC an option to acquire 19.9 percent
of National City's common stock that becomes exercisable under certain
specified circumstances. Corsair Capital, LLC, which owns approximately 7.8
percent of outstanding National City common shares, has agreed to vote all
National City common shares it owns in favor of the deal and otherwise support
the transaction. After closing, PNC intends to merge National City's banking
affiliates into PNC Bank and they will assume the PNC Bank name. The merged
entity will have its headquarters in Pittsburgh.
Based on PNC's closing NYSE stock price of $56.88 on October 23, 2008, the
transaction values each share of National City's common stock at $2.23. The
aggregate consideration is composed of a fixed number of approximately 92
million shares of PNC common stock. Additionally $384 million of cash is
payable to certain warrant holders.
The transaction is currently anticipated to close by Dec. 31, 2008. The
merger is subject to customary closing conditions, including both PNC and
National City shareholders and regulatory approvals. Citigroup Global Markets
Inc., JPMorgan Securities, Inc. and Sandler O'Neill + Partners, L.P. acted as
financial advisers to PNC, and Wachtell, Lipton, Rosen & Katz acted as its
legal adviser. Goldman Sachs acted as financial adviser to National City and
Sullivan & Cromwell LLP acted as its legal adviser, and Cravath, Swaine &
Moore LLP acted as legal adviser to the Board of Directors of National City.
CONFERENCE CALL AND SUPPLEMENTARY INFORMATION
Rohr and Chief Financial Officer Richard J. Johnson will hold a conference
call for investors at 10:00 a.m. Eastern Time today regarding the announcement
of the acquisition. Investors should call 5 to 10 minutes before the start of
the conference call at 800-990-2718 or 706-643-0187 (international). The
related presentation slides to accompany the conference call remarks may be
found at www.pnc.com/investorevents. A taped replay of the call will be
available for one week at 800-642-1687 and 706-645-9291 (international),
conference ID 70844287. In addition, Internet access to the call (listen only)
and to the presentation slides will be available at
www.pnc.com/investorevents. A replay of the webcast will be available on PNC's
Web site for 30 days.
The conference call may include a discussion of non-GAAP financial
measures, which, to the extent not so qualified during the conference call, is
qualified by GAAP reconciliation information that will be made available on
PNC's Web site under "About PNC - Investor Relations." The conference call may
include forward-looking information, which along with the presentation slides
and this news release, is subject to the cautionary statements that follow.
National City Corporation, headquartered in Cleveland, Ohio, is one of the
nation's largest financial holding companies. The company operates through an
extensive banking network primarily in Ohio, Florida, Illinois, Indiana,
Kentucky, Michigan, Missouri, Pennsylvania, and Wisconsin and also serves
customers in selected markets nationally. Its core businesses include
commercial and retail banking, mortgage financing and servicing, consumer
finance and asset management. For more information about National City, visit
the company's Web site at nationalcity.com.
The PNC Financial Services Group, Inc. (www.pnc.com) is one of the
nation's largest diversified financial services organizations providing retail
and business banking; specialized services for corporations and government,
including corporate banking, real estate finance and asset-based lending;
wealth management; asset management and global fund services.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This press release contains forward-looking statements regarding our
outlook or expectations with respect to the planned acquisition of National
City Corporation (National City), the expected costs to be incurred in
connection with the acquisition, National City's future performance and
consequences of its integration into PNC, and the impact of the transaction on
PNC's future performance.
Forward-looking statements are subject to numerous assumptions, risks and
uncertainties, which change over time. The forward-looking statements in this
press release speak only as of the date of the press release, and each of PNC
and National City assumes no duty, and does not undertake, to update them.
Actual results or future events could differ, possibly materially, from those
that we anticipated in these forward-looking statements.
These forward-looking statements are subject to the principal risks and
uncertainties applicable to the respective businesses of PNC and National City
generally that are disclosed in the 2007 Form 10-K and in current year Form
10-Qs and 8-Ks of PNC and National City (accessible on the SEC's Web site at
www.sec.gov and on PNC's Web site at www.pnc.com and on National City's Web
site at www.nationalcity.com, respectively). In addition, forward-looking
statements in this press release are subject to the following risks and
uncertainties related both to the acquisition transaction itself and to the
integration of the acquired business into PNC after closing:
Completion of the transaction is dependent on, among other things, receipt
of regulatory and shareholder approvals, the timing of which cannot be
predicted with precision at this point and which may not be received at all.
The impact of the completion of the transaction on PNC's financial statements
will be affected by the timing of the transaction, including in particular the
ability to complete the acquisition in the fourth quarter of 2008.
The transaction may be substantially more expensive to complete (including
the integration of National City's businesses) and the anticipated benefits,
including anticipated cost savings and strategic gains, may be significantly
harder or take longer to achieve than expected or may not be achieved in their
entirety as a result of unexpected factors or events.
Our ability to achieve anticipated results from this transaction is
dependent on the state of the economic and financial markets going forward,
which have been under significant stress recently. Specifically, we may incur
more credit losses from National City's loan portfolio than expected. Other
issues related to achieving anticipated financial results include the
possibility that deposit attrition may be greater than expected. Litigation
and governmental investigations currently pending against National City, as
well as others that may be filed as a result of this transaction or otherwise,
could impact the timing or realization of anticipated benefits to PNC.
The integration of National City's business and operations into PNC, which
will include conversion of National City's different systems and procedures,
may take longer than anticipated or be more costly than anticipated or have
unanticipated adverse results relating to National City's or PNC's existing
businesses. PNC's ability to integrate National City successfully may be
adversely affected by the fact that this transaction will result in PNC
entering several markets where PNC does not currently have any meaningful
retail presence.
ADDITIONAL INFORMATION ABOUT THE PNC/NATIONAL CITY CORPORATION TRANSACTION
The PNC Financial Services Group, Inc. and National City Corporation will
be filing a joint proxy statement/prospectus and other relevant documents
concerning the merger with the United States Securities and Exchange
Commission (the "SEC"). WE URGE INVESTORS TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS TO BE FILED WITH THE SEC IN
CONNECTION WITH THE MERGER OR INCORPORATED BY REFERENCE IN THE JOINT PROXY
STATEMENT/PROSPECTUS BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors will be able to obtain these documents free of charge at the
SEC's Web site (www.sec.gov). In addition, documents filed with the SEC by The
PNC Financial Services Group, Inc. will be available free of charge from
Shareholder Relations at (800) 843-2206. Documents filed with the SEC by
National City Corporation will be available free of charge from National City
by contacting Investor Relations at (800) 622-4204.
The directors, executive officers, and certain other members of management
and employees of National City are participants in the solicitation of proxies
in favor of the merger from the shareholders of National City. Information
about the directors and executive officers of National City is included in the
proxy statement for its 2008 annual meeting of shareholders, which was filed
with the SEC on March 7, 2008. Additional information regarding the
participants in the proxy solicitation and a description of their direct and
indirect interests, by security holdings or otherwise, is contained in the
proxy statement for National City's September 15, 2008 special meeting of
shareholders, which was filed with the SEC on August 4, 2008. Additional
information regarding the interests of such participants will be included in
the joint proxy statement/prospectus and the other relevant documents filed
with the SEC when they become available.
The directors, executive officers, and certain other members of management
and employees of PNC are participants in the solicitation of proxies in favor
of the merger from the shareholders of PNC. Information about the directors
and executive officers of PNC is included in the proxy statement for its 2008
annual meeting of shareholders, which was filed with the SEC on March 28,
2008. Additional information regarding the interests of such participants will
be included in the joint proxy statement/prospectus and the other relevant
documents filed with the SEC when they become available.
SOURCE The PNC Financial Services Group, Inc.